We have a property that we are financing the purchase of. The flood determination came back and the house is not in a flood zone, but the deck that is attached to the house is in the flood zone. Is the property subject to the flood insurance requirements even though only the deck is in the flood zone?
Yes – the property is subject to the flood insurance regulations. This is because even if one piece of the building that the bank is taking as security is in the flood zone, then the entire structure should be covered by flood insurance. Now, if the deck was detached from the house, then flood insurance would not be required. However, here, the deck is attached and in a flood zone. Thus, the entire house needs to be covered by the requisite amount of flood insurance.
12 CFR § 339.3(a):
“(a) In general. An FDIC-supervised institution shall not make, increase, extend, or renew any designated loan unless the building or mobile home and any personal property securing the loan is covered by flood insurance for the term of the loan.”